It is not clear from all you said, what does Illustrator have to do with your problem. You provided a PDF file that opens in CS5 exactly as you showed it on the image in your post. Are you saying that this PDF file will open differently in CS4?

I don't have Illustrator CS4 around me to test it but in CS5 I just selected all Ctrl+A and removed all clipping masks with Ctrl+Alt+7. These clipping masks don't do anything anyway but just clip the edges if the letters. Then I saved as .ai and also as PDF with and without Preserve Illustrator Editing and then opened again all files without any problems. Hopefully someone here has access to CS4 and will open your pdf to see if these clipping masks problem is there.

I don't want to point fingers as I have no idea where the culprit is but often these kind of problems are caused by software that doesn't follow strictly a standard like the PDF file format standard in this case, So, it is possible that the problem could be caused by the program that created the PDF file. It is not unusual programmers to save time by simply testing their code making sure it works instead of following strictly the file format standard. In such cases everything works fine until a new version of the software is created.

Didn't see Scott's reply before I wrote my previous post, so after his report I'm inclined to believe that the problem comes from CS5 but so far limited with files created with the software that made the PDF.

If you look at the PDF info you can see that AICS6 and AICS4 (and CS5) use PDF 1.5 as the default format. The Xara export is using PDF 1.6. So it may be a bug in the PDF 1.6 format. Or a bug in how Xara is writing PDF1.6 as emil emil eluded to. Things may be entirely different if Xara is set to use PDF1.5 for the export.

I'm guessing that the issue may be the gradient changes in CS5 and CS6. CS5 allows transparency on Gradient Meshes. CS6 allows gradients on strokes (with transparency as well).

It's customary to see clipping masks when AI art is back-saved to older versions or saved to older PDF formats. The gradients get rasterized and a clipping mask is created from the shape. It would appear that the Xara export is being read the same way.

Sometimes ticking the "Compatible Gradients" option when backsaving AI files will resolve the issue. If there's some preference in the Xara export regarding gradients or meshes, you may look at those settings closer (sorry I don't really know Xara at all since it's PC-only).